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U.S. Trade Gap Falls Unexpectedly (Doug Palmer, 7/13/04, Reuters)

The U.S. trade deficit narrowed unexpectedly in May as stronger growth by U.S. trading partners and the weak dollar helped propel exports to record levels, according to government data on Tuesday.

Analysts said the smaller-than-expected trade gap will likely boost second-quarter U.S. economic growth. Meanwhile, a trio of other reports painted a mixed picture of consumer spending trends, a key driver of the U.S. economy.

The May deficit totaled $46.0 billion, well below a median estimate of $48.3 billion from Wall Street analysts surveyed before the report.

The gap narrowed for the first time in six months despite the highest prices for imported oil in nearly 22 years, which helped push overall imports to a record high as well.

Jim Glassman, senior economist with J.P. Morgan Securities in New York, said the report should prompt forecasters to raise estimates of second-quarter growth by "a half a point or so," depending on the June trade numbers.